Texas, once considered the Wild West lawsuit capital of the world, now claims a reputation as the fairest state in the nation when it comes to balancing the right to seek justice against the need to keep legal costs sensible.

A decade of state lawsuit reform laws between 1995 and 2005 led the Pacific Research Institute in California to name Texas as the best legal environment in the country in its "U.S. Tort Liability Index: 2006 Report."

This recognition serves as an economic development boost for Texas. Companies can invest here knowing they are less likely to be victimized by frivolous lawsuits and outlandish jury awards.

Many of the dozens of reforms that led Texas to the top of the list were constitutional amendments approved by statewide voters. Some of the changes are:

--Limits on punitive damages in negligence cases.

--The restriction of asbestos-related lawsuits to plaintiffs who are actually sick from exposure to the cancer-causing substance.

--Elimination of class-action contingency fees in favor of hourly rates with possible multipliers. Previously, some lawyers were hired on contingency and paid only if damages were recovered -- often a third of the total.

--Caps on pain, suffering and other noneconomic damages in medical malpractice cases.

--A rule that lets Texas judges refuse lawsuits involving disputes originating outside the state. This helps stop "venue shopping," the search for friendly judges and juries.

--Narrower rules in product liability lawsuits, including more protection for defendants if products carry government-approved warnings. Retailers also have more protection if they simply acquire the product in question from a manufacturer and sell it to buyers who later allege injury.

If Texas had not instituted these and other reforms over the past decade, it would rank No. 41 among the states in legal financial liability, Pacific Research Institute said.

Frivolous lawsuits and unlimited jury awards add up to a huge economic burden nationwide by adding to the cost of doing business. The President's Council of Economic Advisers estimated in 2004 that 76 percent of lawsuit costs were excessive. Unnecessary legal expenses total an estimated $198 million, which amounts to a yearly tax of $2,654 on a family of four.

The benefits to Texas are most notable in the medical and insurance fields. More insurance companies are moving to Texas, providing more competition and better rates to consumers. More doctors are active in the state, too.

The Texas Alliance for Patient Access says Texas has gained nearly 4,000 doctors after passage of liability reforms. After a net loss of 14 obstetricians from 2001 to '03, the state has seen a gain of 146 of these doctors.

Some of the reforms were pushed by Texans for Lawsuit Reform, headed by President Richard Trabulsi Jr. in Houston. He said his organization is careful not to impede legitimate lawsuits. "I never know when I'm going to be a plaintiff myself," Trabulsi said.

When legitimate lawsuits are filed, they can be tried more quickly and effectively because court dockets are not as congested with frivolous cases.

"The law west of the Pecos" no longer dominates Texas courtrooms, and the state's business landscape looks better because of it.